DowDuPont (DWDP) Plans to Invest $100M in Facility Expansion
DowDuPont Inc. DWDP plans to invest around $100 million to expand manufacturing capacity and to modernize facilities at the Sabine River Works plant in Orange County, TX. The added capacity is expected to come online in several phases starting in 2020.
This investment, spanning over the next two years, will incrementally expand production to support global growth of specialty materials manufactured at the site, specifically the Surlyn, Nucrel, Fusabond and Vamac product lines. The company is also contemplating longer-term plans to invest in a new facility to further support market growth.
Given the strong demand of advanced polymers, this investment will enable both the Packaging & Specialty Plastics business of DowDuPont’s Materials Science Division as well as the Transportation & Advanced Polymers business of its Specialty Products Division to meet growing demand of specialty materials used for applications in food packaging, transportation and consumer goods.
DowDuPont has underperformed the industry it belongs to over a year. The company’s shares have moved up around 7.2% over this period, compared with roughly 11.7% gain recorded by the industry.
DowDuPont is seeing strong leading indicators of broad-based growth across developed economies such as in the United States, Germany and France. Moreover, the emerging middle class in developing economies, especially in China and India, continues to support sustainable growth. This augurs well for the company’s products and technologies.
The company has also realized more than $800 million in annual cost synergy run-rate from its cost synergy programs. It has raised its cost-synergy commitment from $3 billion to $3.3 billion. DowDuPont remains committed to achieve the increased cost synergy target and deliver new products from growth investments and strong innovation pipeline.
Zacks Rank & Stocks to Consider
DowDuPont currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the basic materials space are Kronos Worldwide Inc.KRO, Methanex Corporation MEOH and LyondellBasell Industries N.V. LYB.
Kronos has an expected long-term earnings growth rate of 5% and sports a Zacks Rank #1 (Strong Buy). The company’s shares have moved up 51.3% in a year. You can see the complete list of today’s Zacks #1 Rank stocks here.
Methanex has an expected long-term earnings growth rate of 15% and flaunts a Zacks Rank #1. Its shares have gained 41% over a year.
LyondellBasell has an expected long-term earnings growth rate of 9% and carries a Zacks Rank #2 (Buy). Its shares have moved up 20.8% in a year.
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